Last Updated : Nov 12, 2020 10:51 PM IST | Source: Moneycontrol.com

Amazon, Flipkart may have to pay steep fines for failure of sellers to publish country of origin

According to govt officials, since etailers are the facilitators, they will be held responsible. ‘The fine can start from Rs 25,000 for the first offence. It can get extended for multiple offences. There is no immediate clarity whether there will be a cap on the fine.

Etailers such as Amazon and Flipkart will be held liable and can be fined if sellers on their platforms do not publish the country of origin on their products, according to a senior government official.

"When you (etailers) allow sellers (to sell)..., do not allow them to violate the law. You will be held liable because you are the facilitator," the official told Moneycontrol on condition of anonymity.

According to him, companies are liable to pay a fine starting from Rs 25,000 for the first offence. It can get extended for multiple offences. There was no immediate clarity if there will be a cap on fine. Currently, just 70 percent of the listings available on the two ecommerce companies comply with this rule.

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Last month, the Ministry of Consumer Affairs had sent the two etailers notices for not displaying the country of origin on products sold on their websites. The ministry had asked them to explain the reason within 15 days, failing which action would be initiated against them as per the provisions of the Legal Metrology Rules, 2011.

According to the source quoted above, the etailers have sent their responses to the government stating that they have already started delisting sellers who have failed to display the country of origin of their products. “The government is now examining their response and will decide on the next mode of action shortly.”

Flipkart did not respond to queries.

An Amazon spokesperson said: “Amazon.in is a marketplace enabling third party sellers to list and offer goods for sale to customers in India. Third-party sellers list, own and sell products on the marketplace, and they are also responsible for updating the country of origin, as legally mandated. We display country of origin information for all products as provided to us by the sellers."

How do etailers resolve the issue?

Industry sources said etaliers can scan through the products listed on their websites through data search algorithms to figure out which fields are populated and which are not in the product listing form.

However, even as they can scan out the listings which do not have the country of origin mentioned, they cannot update that themselves since that information lies with the sellers who listed the products. Etailers have been consistently asking sellers to update their listings in the last few months.

According to an industry source, the companies are weeding out sellers from the marketplaces organically. “Sellers who do not provide the details of the country of origin will not be able to list their products and are automatically exiting the system.” There is  no immediate clarity on the number of sellers who have exited so far.

Issue lies with older listings

While the new listings have started displaying the country of origin, the issue is mostly occurring with the older listings that have been there before the government highlighted this issue in July, following the standoff on the India-China border.

The listings are in millions and will take a reasonable amount of time to get updated. It was easier for companies to make it compulsory for sellers to mention the country of origin to the new products being listed. But in order to take care of the existing or legacy listings, a lot of scanning is required, a source said.

Meanwhile, multiple sourcing of products is also making it difficult for sellers to categorise the name of the country as they face issues in ascertaining the exact origin of the product.

In their response to the government, the etailers have sought time on behalf of the sellers who are trying to update the older listings.

Idea behind the rule

The idea behind displaying the country of origin on the product is to ensure that consumers make an informed choice at a time when nationalism is ruling the roost in the wake of anti-China sentiments following the Galwan Valley clash. It is also happening at a time when the government is trying to push hard for its Make-In-India initiative, sources said.

Blow for MSMEs

Micro, Small and Medium Enterprises (MSMEs) which have felt a heavy blow, post the pandemic, also want the government to go slow with this as they fear it will directly impact their businesses, a good amount of which is coming from online.

“Strict compliance should be deferred at least for the next six months as most MSMEs are yet to get out of the havoc unleashed by the COVID-19 pandemic, with disruptions in supply chain, lower demand and employee welfare testing their sustainability,” said Vinod Kumar, President, India SME Forum.

“Ecommerce has been a big enabler both for national sales as well as for exports and offers great potential for MSMEs from across the length and breadth of the country, including in rural clusters and tier 2 and 3 cities. Knee-jerk policy decisions will only put more burden on a vulnerable sector with a death rate of above 38 percent, and yet has been the mainstay of India's employment-generation,” he said.
First Published on Nov 12, 2020 11:27 am
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